Why I don’t have Social Security, and neither should you | Smart Switch: Personal Finance

(christy bieber)

When I set retirement savings goals and make financial plans for my later years, I don’t take Social Security benefits into account. I anticipate having plenty of savings to live on without money from these retirement benefits, even though they are an important source of income for many seniors.

There are three main reasons why I don’t count on Social Security as a source of support. These reasons may also convince you to make your own plans without anticipating your monthly Social Security checks.

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1. I am not in control of when the rules for Social Security benefits will change.

The first big reason why I don’t have Social Security it’s because the benefits program is in financial trouble.

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The program’s trustees have warned that the trust fund used to pay benefits will run short in 2033. That’s long before I’m ready to retire. To be clear, this does not mean at all no Retirement income from Social Security will come in once the trust fund is depleted, as tax revenue collected from current workers will be enough to pay about 3/4 of the promised benefit amount.

However, the reality is that outages could happen, and they would be out of my control. Lawmakers could also make changes to Social Security to shore up its finances that would affect the benefits I’ll receive. For example, the full retirement age could be delayed. That would mean I would have to delay the start of my checks or accept a smaller monthly payment.

Because I can’t anticipate exactly how much money I’ll receive from Social Security and because the decisions that affect it will be made by politicians and not by me, I prefer not to consider benefits as a source of guaranteed retirement income. Otherwise, you could end up counting on money and getting less than expected.

2. I may want to retire before claiming Social Security benefits

Although Social Security benefits can start as early as 62I hope to claim my benefits later in life.

This is because waiting for benefits to start allows you to maximize the monthly amount you receive. I’d rather receive fewer large checks later in life than smaller checks sooner, and I also hope to outlive my projected life expectancy, which would mean a later claim provides more Social Security income for life.

Since I hope to delay applying for Social Security until age 70, but plan to retire well before then, I’ll need enough savings to support me for many years before I start receiving retirement benefits. Since my savings should be enough to cover my costs on their own for many years, I don’t count on Social Security to pay my bills.

3. I’d rather end up with extra money than very little

Ultimately, the main reason I don’t have Social Security is because I’d rather have more money than I put down than less. If I make retirement plans that ensure I have enough saved to support me without Social Security, any money that comes from benefit checks will be extra.

Since the money will eventually come from my retirement benefits, I guarantee I’ll have more than I need without Social Security as a source of support.

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